Press Release

Investors put Audit Committee Chairs on notice over continued omission of climate risks in financial reporting ahead of 2022 AGM season


  • 34 investors collectively representing over $7.1 trillion in assets have sent letters to 17 of Europe’s largest companies, including BP, Glencore and Volkswagen
  • Investors request an explanation from Audit Committee Chairs as to why expectations over 1.5°C-aligned accounting disclosures have not been met
  • Investor escalation possible this AGM season for the worst offenders

34 members of the Institutional Investors Group on Climate Change (IIGCC) collectively representing over $7.1 trillion in assets have signed letters to 17 of Europe’s largest companies asking why expectations over climate related accounting disclosures have failed to be met.

Sent ahead of 2022 company AGMs, the letters’ signatories warn of the possibility of increased voting against Audit Committee directors’ appointment if expectations are not met.

Part of an ongoing campaign to seek visibility of how accelerating decarbonisation could impact companies’ financial position, the letters follow previous letters and a copy of ‘Investor Expectations for Paris-aligned Accounts’ sent to 36 companies in November 2020.

The latest letters are copied to lead audit partners for each company to underscore the auditors’ responsibility to alert shareholders to potential misrepresentation where material climate risks are left out of the accounts. The Big Four audit firms have also been contacted separately in recent months in the UK, US and France with investor expectations on climate accounting.

Climate change and the global transition to net zero carbon emissions will have material economic impacts on a wide range of companies and their future prospects. Regulatory and legal changes aimed at delivering decarbonisation will profoundly change businesses in the energy, transport, mining and industrial sectors to name a few. Asset lives could be shortened, clean-up costs brought forward, prices for final products reduced and demand curtailed. Such changes need to be reflected in critical accounting assumptions and how assets and liabilities are valued on company balance sheets.

The latest investor letters state: ‘we lack the required visibility to give us confidence that the economic impacts from climate change and associated policy action are being properly accounted for. We have little understanding of how [company]’s financial position might be impacted be accelerating decarbonisation associated with a 1.5°C pathway.’ A template version of the full letter can be viewed here. (Note: each company received a tailored version).  

The 17 companies that received letters were: Air Liquide, Anglo American, Arcelor Mittal, BMW, BP, CRH, Daimler, Enel, Equinor, Glencore, Renault, Rio Tinto, Saint-Gobain, Shell, ThyssenKrupp, TotalEnergies and Volkswagen.

The 34 institutional investors who collectively signed the letters include: BMO GAM EMEA, Danica Pension, ERAPF, HSBC AM, La Française, LAPFF, NEST, Rathbones, Sarasin & Partners and USS.

Stephanie Pfeifer, CEO, IIGCC, said: “Climate change poses a material risk to companies all around the world, but when it comes to their financial statements it is frequently understated or completely ignored altogether. Important matters, such as physical impacts or the potential for further regulatory change and what this could mean in terms of stranded assets or any other material outcomes, are routinely failing to be disclosed.”

“How can companies who are fundamentally intertwined with the long-term fallout of climate change, such as those in the fossil fuel industries, be missing such a material risk in their financial reporting? Investors are waking up to this question and appear increasingly prepared to use their votes in reappointing Audit Committee directors to make their point.”

Natasha Landell-Mills, Partner and Head of Stewardship, Sarasin & Partners, said: “Investors cannot understand the true value of a company without knowing the embedded climate risks. Company financial statements that leave out climate risks are thus not just potentially failing to meet statutory requirements but will drive too much investment into carbon-intensive activities. In simple terms, poor accounting is exacerbating the perilous state of our climate. It is time investors held audit committee directors and auditors to account for delivering 1.5C-aligned accounting disclosures.”

Matt Crossman, Stewardship Director, Rathbones Group, said: “We’ve a responsibility to understand how climate change can impact our investments and allocate assets to minimise those risks, be they physical or transitional risks. Understanding financially material environmental risks such as climate change, and therefore playing our role in the transition to a net zero economy, is part of our fiduciary duty as stewards and allocators of capital.”

“However, this job is made more difficult if the financial information provided by companies doesn’t take account of climate risk. We can’t rely on ‘business as usual’ accounting assumptions as the energy transition unfolds. Along with our commitment to be a net zero investor, ensuring company accounts are aligned to a 1.5°C degree future is a crucial first step.”

Vicki Bakhshi, Director, Responsible Investment, BMO GAM (EMEA), part of Columbia Threadneedle, said: “Whilst some companies have started to integrate climate considerations into their accounting disclosure, we are a long way from seeing consistent 1.5°C-aligned accounts, which is why we have supported this latest round of letters to Boards.”

“Investors need visibility into the implications of net zero pathways for companies’ financial positions to fully understand holdings’ capital at risk and dividend resilience. To protect investor capital and assist financing of the transition, Boards and their audit partners must do more to reflect these material issues in financial reporting.”

Philipp Kloucek, Responsible Investment Analyst, USS, said: “Climate change is a financial risk to the returns generated by our assets. As such, we expect companies to reflect properly the implications of delivering the Paris Agreement in their financial statements and auditors to provide reassurance whether the accounts can be considered Paris-aligned.”

Katharina Lindmeier, Senior Responsible Investment Manager, Nest, said: “Last year we challenged carbon-intensive companies about making changes. We’re now escalating and writing to their audit committees, calling for climate change to be considered in their financial statements.”

“The threat climate change poses to companies is real and as a global investor, with billions of pounds in some of the largest companies in the world, we want that risk taken seriously.”

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Notes to editors

Media contact

Ross Gillam, Head of Media Relations, IIGCC

+44 (0)738 850 6013


The Institutional Investors Group on Climate Change (IIGCC) is the European membership body for investor collaboration on climate change and the voice of investors taking action for a prosperous, low carbon future. IIGCC has more than 375 members, mainly pension funds and asset managers, across 23 countries, with over €51 trillion in assets under management.

IIGCC works to support and help define the public policies, investment practices and corporate behaviours that address the long-term risks and opportunities associated with climate change. For more information visit and @iigccnews.